Last summer, 181 directors of large American companies gathered in the Business Roundtable changed their tune. Their only concern has been, for 50 years, to generate value for their shareholders. Now, they have affirmed, it is - just as much - to assume their social responsibility. A reversal which confirms that, decidedly, finance changes its discourse and can be of philosophy.
A handful of convinced people have long argued for it to be more "responsible". Let it no longer look only at profits, but also at the impact of businesses on the environment, their social role and, of course, their governance. Because, thus, the world would be better. But also because the real value of a company can only be judged by this yardstick. These pioneers finally hit the mark. Today, these three-letter principles - ESG - have become the mantra of more and more investors.
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At the end of 2018, more than 30.7 trillion dollars were already officially managed in the main financial markets of developed countries. And vocations are multiplying. The American JP Morgan AM, for example, has made ESG one of its priorities for 2020. Even BlackRock, the world's largest manager, promised in January to be more demanding on the management of climate risk by companies.
French managers have been doing it for a long time. They already declared at the end of 2018 to manage 1,458 billion euros in a “responsible” way. A jump of 40% in one year. That is how quickly they convert their portfolios. A third of the some 4,000 billion euros they invest are thus managed with ESG criteria, placed in funds that exclude the most criticized sectors (tobacco, coal, oil ...), or even for example labeled SRI (socially responsible investment).
"Since 2015 and the Paris Climate Agreements, responsible investment has shifted to another dimension, " confirms Anne-Catherine Husson-Traore, CEO of Novethic, a subsidiary of Caisse des Dépôts. In developed countries, public opinion and regulations are now pushing large investors to action. Since 2015, for example, in France, institutions must each year officially report on how they take ESG criteria into account in their investments, identify their climate risks and indicate the efforts made for the ecological transition. Bread blessed for NGOs, quick to "tackle" those whose promises would not be reflected in the annual reports.
As insurers are major clients for asset managers, they have followed suit. A call for tenders is no longer launched on the Paris market without the management company being questioned about its SRI approach. “For us, who manage capital for several decades, the sustainability of investments, the sustainability of businesses is more important than short-term performance. And for that, we need the ESG analysis ”, insists Arthur Chabrol, Deputy Managing Director of Aviva France.
This is also what Anglo-Saxon financiers are now thinking, and not just to establish their reputation. In the ESG, what they like most is the “E” environment. Because, on the markets, grew the conviction that climate change compromises the business model of many companies, whose environmental impact is too unbearable for the planet (oil companies ...), who will be penalized by regulations more severe or victims of weather disturbance. “Today, in the United States, coal mines are facing the worst difficulties because no one wants to finance them. Shale oil is taking the same path, ” recalls Alain Pitous, director of responsible finance at Ofi AM.
On the other hand, capital is flowing to companies that invest in renewable energies, energy saving solutions, and waste management. "Part of the economic growth is driven by innovations in the field of sustainable development," observes Philippe Zaouati, president of Mirova, a pioneer of responsible investment in France.
For supporters of SRI, this is a victory. Finance is turning away from companies whose development model is not sustainable for the planet and is reorienting itself towards alternative solutions. "Above all, this can encourage the vast majority of companies, those which are neither the most polluting nor at the forefront of the energy transition, to move forward on the right path rather than to keep bad practices ", rejoices Anne-Catherine Husson-Traore.
"More transparency"
Skeptics note, of course, that the stock markets are sheepish, quick to bring to the skies themes that they will lose interest a few years later. This is how the bubbles deflate. “But this is not the case on this subject. Responsible finance is not a fashion, it is a fund trend because it meets society's expectations, especially among young people, says Guillaume Dard, president of Montpensier Finance . It is growing because companies and managers are convinced that they must play a role in this change. And, what's more, it's true, it's a good investment on the stock market today. ”
To make so many promises, finance takes risks. Public opinion is no longer satisfied with fine words and greenwashing pays less and less. No sooner had BlackRock claimed to be interested in climate risks than the NGOs tapped on its fingers, because of the large number of “climate” resolutions that the manager rejected during shareholders' meetings. "Savers and public opinion expect responsible finance to be more transparent than it offers today ," admits Léa Dunand-Chatellet, head of sustainable finance at DNCA. There are not enough standards, there are not enough guidelines . ”
For nearly 30 years, responsible management in France has been based mainly on notes given to companies by analysts like Vigeo. The ESG manager must look - with more or less attention - at this note before buying a share or a bond which seems attractive to him. “However, almost all large companies today have good grades. This does not mean that their trajectory is going in the right direction, that they are improving their human relations practices, that they are acting for the climate, ” notes Léa Dunand-Chatellet. It calls for more targeted SRI management, "of conviction" more than statistics.
For the moment, most of the managers that claim to be ESG thus remain very close to the composition of the major stock market indices, which feeds critics. To enlighten savers, to assure them that SRI funds are investing well as promised, the French State has launched a label. It is affixed to funds which are subject to its conditions and to an independent audit. Last year, the outstandings of these labeled funds doubled, according to Novethic. But they still only totaled 278 billion euros, far from the 1,458 billion ESG displayed by the French managers. Some managers who claim to be ESG still have little or no labeled funds, often because they fear that the label will one day become too demanding.
However, on the contrary, clients are becoming more careful. " They are asking us for funds investing in job-creating companies, in particular locally, on the environment and on biodiversity," adds Arthur Chabrol. And they want the real impact to be measured, to be shown that the choice they made has paid off. ”